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News of the Day ... In Perspective

12/21/2006

Medicare bounty hunters unleashed

Recovery Audit Contractors (RACs)—aka bounty hunters—will be unleashed on providers nationwide by 2010, owing to a Dec 9 congressional vote on the Tax Relief and Health Care Act of 2006.

Expansion of the three-state pilot program is a trade-off, probably for elimination of the planned 5.1 percent physician fee cut.

In California, Florida, and New York, RACs identified $303 million in “improper payments,” in a year and a half of audits. These were overpayments for alleged “unnecessary services,” improper coding, and secondary payer issues.

The claims to be audit by RACs have been expanded to include “all services for which payment is made under part A or B,” including home health and hospice services. E/M claims will be excluded “in the beginning.”

The AMA has complained that RAC methods are draconian and time-consuming. The contingency-fee payment system, it argues, creates “perverse incentives.”

A CMS spokesperson stated that RACs are paid for finding both overpayments and underpayments, though payment rates may differ.

Some providers complain that current RAC auditors don’t understand Medicare rules, and are not always qualified to review medical necessity because they are not physicians or specialists (Medicare Compliance Alert Breaking News Alert 12/13/06).

Other anticipated changes in Medicare include increased reliance on civil monetary penalties as opposed to criminal actions. The Office of Inspector General (OIG) is thought to prefer civil penalties because the burden of proof is lower (preponderance of evidence rather than beyond a reasonable doubt). Also, cases go to an administrative law judge, resulting in “less red tape” for the government (Medicare Compliance Alert 12/11/06)—and less due process for physicians.

Democrat control of Congress is expected to lead to increased enforcement. Rep. Pete Stark (D-CA) is expected to “come roaring out of the shadows.” Stark complains that the past six years have seen a “complete ignoring of oversight” (Medicare Compliance Alert 11/13/06).